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7-Eleven’s Store-Brand Strategy

March 11, 2014, 04:03 pm
By Randy Hofbauer, Stagnito Media

ROSEMONT, Ill. -- When it comes to creating a top-notch store brand program, retailers cannot simply develop winning products and leave them as is for their lifespan. They need to constantly reinvent and tweak these products according to the changing marketplace and shifting consumer tastes.

During his presentation, “Private Brands — Big Growth in Small Formats,” Thompson explained that his team takes a three-pronged approach when it comes to product development: creation, reinvention and “kaizen” — a Japanese word that basically translates to “improvement.”

In the creation phase, Thompson’s team develops something new — not necessarily new to retail, but new to 7-Eleven. To do this, his team works to understand unmet guest needs through a current situation analysis (CSA) process, which involves interpretation of industry data, internal data and consumer insights.

The company recently used this process to develop a line of dried fruit and nut snacks.

“We knew that the nuts and seeds category was really growing, especially in the c-store, but we really were intrigued with what was happening at premium retailers,” he said. “You look at a Whole Foods [and] what they were doing, you look at Trader Joe’s — and you saw this product that was beautifully showcased through packaging that let the product kind of speak to the guest.”

Along with employing the CSA process, Thompson’s team also has to ask several questions: How is the product unique? What are the right quality benchmarks? How do we position ourselves from a higher-quality perspective?

In the case of the dried fruit and nut snacks, product preparation and packaging were key to creating a high-quality differentiated product, Thompson stated, noting that 7-Eleven partnered with Flagstone Foods, a St. Paul, Minn.-based manufacturer, on development. The right cooking oil and a bigger package made all the difference.

Once 7-Eleven's private brands team completes the product development process, it works to develop a “bold merchandising” plan that will capture the attention of guests who enter their local 7-Eleven store three to four times a week, Thompson explained.

“They can see it and we can get credit for it,” he said. “They can buy it and give us feedback.”

A Necessary Update

For the reinvention phrase, 7-Eleven’s team performs a “significant update across a product portfolio” to bring assortments in line with guest needs. For example, even though the company developed quality products in the nuts and seeds category, Thompson said they weren’t seeing the expected growth.

“So, we looked at it to sort of understand why,” he said. “What’s in it for the guest? What’s in it for the franchisee? And the value proposition, quality proposition — was it exactly where we need it to be?”

Thompson and his team wanted to create value for consumers, while still making something unique that matched the consumption trends identified within 7-Eleven’s CSA process.

Therefore to reinvent the product line and “assert an ownership position” in the category, the team benchmarked the right product quality, package size and product positioning, deciding to create products that are of “significantly” higher quality and in bigger pack sizes than national-brand counterparts.

“We have 20 items that are coming out this summer,” he said. “And again, for us, it was about ownership of that from an execution standpoint — What are we going to do digitally? How are we going to really display this product? How are we going to make it fun for the guest?”

Never Settling

Finally during “kaizen,” Thompson’s team performs ongoing testing to ensure quality is constantly being challenged, from products and packaging to their presentation in stores.

In the end, perhaps the hardest part of the entire process is balancing speed with uncompromised quality, which Thompson said he constantly has to do for his executive committee.

“They want results now, but they also want the best,” he said. “So, I’m trying to figure that piece out.”